Email and Your Personal Brand

Fast Company's Jonathan Rick has written a terrific column titled "What Your Email Says About Your Brand."  Here's Rick's main argument:

It’s something you take for granted, something seemingly trivial, even mundane. When executed thoughtfully, however, it makes a splash. It says, “This guy is sharp--I want to work with him!”  What is this opportunity, obvious but overlooked? It’s the bookends of your emails: your address and signature block--often, the first and last thing your recipients will see. For better or worse, your email bookends are powerful purveyors of your brand. What are yours conveying about you?

Rick goes on to offer some solid advice about what to do, and what not to do, when it comes to email.  Along the way, he offers several great examples for us to emulate... or not.  Among his nuggets of advice, he cautions against email addresses that will make it difficult for others to take you seriously.  A funny nickname may sound great with your pals, but it will make you sound highly unprofessional if you are trying to land a job or win over a client for your small business.   

Brad Pitt's Chanel Ad

You never want your high-priced advertising campaigns to end up parodied in this manner on Saturday Night Live!  Knowledge at Wharton has a good article about how these types of marketing campaigns can backfire for companies. 

Career Advice from Chris Stevens of Keurig

Source: Notre Dame

Last week Chris Stevens, one of the Keurig co-founders, gave a speech at the Bryant University Collegiate Entrepreneurs Organization conference.   He offered a tremendous mix of practical advice and emotion-packed inspiration.   Chris has a fascinating background.  He played basketball at Notre Dame, worked at Proctor & Gamble and Anheuser Busch before joining with several others to make Keurig a resounding success.  He currently serves as an adjunct faculty member at Notre Dame's Mendoza College of Business.  He also still serves as VP of Corporate Relations at Keurig.  Beyond his business accomplishments, Chris has done tremendous philanthropic work over the years.   He's also faced more than his share of personal adversity, including the death of his wife and two brothers in 2004. 

Chris offered some terrific practical advice for students searching for jobs.  He recommended that each student build a portfolio that they could take on job interviews.  That portfolio should include examples of the type of work that the student has done.  What projects have they completed at school or during an internship?  What presentations have they made?   Beyond simply putting the portfolio together, he recommended customizing it for the particular company at which a student was interviewing.  He told students to put the company name and logo on the front of the portfolio, and even the name of the executive with whom he or she would be interviewing.  Then they should offer to leave the portfolio with the interviewer.   It makes great sense.   Students (and all job applicants) need to be prepared to SHOW people what they have done, not just tell them about it. 

Marissa Mayer and the End of Telecommuting at Yahoo

The Wall Street Journal "At Work" blog has a terrific post about Marissa Mayer's memo to all Yahoo employees essentially ending telecommuting at the firm.   Some people reacted very negatively to her announcement.  How could she ban working from home given the proliferation of technologies that enable virtual collaboration?  What type of message did this move send to working parents trying very hard to juggle professional and personal commitments responsibly?  Would this announcement scare away some terrific talented people? 


The blog post points out, however, that there are significant downsides to extensive telecommuting at a firm.   The bottom line:  Face-to-face interaction does promote more effective collaboration and information sharing in many instances.   People do lose the ability to read nonverbal gestures if they are not physically present at meetings.   Moreover, many ideas get shared when people bump into one another in the hallways or at the cafeteria.   As Saul Kaplan of the Business Innovation Factory argues, innovation occurs through the "random collision of unusual suspects" in many cases.  We can't design or plan those interactions.  However, the right type of working environment at a firm can promote that type of interaction.   If many people work from home, they don't have those opportunities to engage with others in unplanned ways.  


The challenge, though, is that many people may interpret Mayer's move as a belief that telecommuters are simply not working hard enough outside the office. That interpretation may cause a drop in morale at the firm.  In addition, some very talented people may simply not be willing to engage in a lengthy commute each day.   Finally, not all jobs are alike.  While some tasks require intense collaboration and may benefit from having people in the office together, other jobs may not require frequent interaction with colleagues.   Does a blanket policy make sense when work comes in many different forms, and jobs differ significantly in terms of interdependence?  

Mattel, Moms, and Hot Wheels Cars

Mattel has chosen to tackle a very interesting problem with regard to its Hot Wheels line of toy cars, according to Business Week.  Sales have been sluggish in recent years.  The company believes that the lack of sales growth may be due to a "moms" problem.  Specifically, Mattel believes that moms don't really appreciate why young boys like to play with cars, nor do they understand how boys play with them.  According to Mattel Vice President Matt Peterson, "She doesn’t get why cars, engines, and all the shapes and crashing and smashing are so cool."  On the other hand, Peterson argues that mothers do understand how to play with a Buzz Lightyear toy, because the type of play is somewhat similar to how they might have interacted with dolls as a young girl. 

The company chose to gather together a group of bloggers - specifically moms who wrote influential blogs read by fellow women with small children.   Peterson conducted a lengthy discussion with the moms, to examine why they chose not to purchase cars for their sons... as well as to talk about why boys do like to play with cars. 

I have two reactions to this story.  First, I'm not sure if Peterson's hypothesis is correct.  Is his diagnosis of the sluggish sales of Hot Wheels correct?  Does he really have a "moms" problem?   Presumably, he has more data than provided in the article.  Hopefully, he has explored alternative hypotheses as well.  Second, a focus group might be helpful here, but Mattel will have to go well beyond a discussion such as this one to understand how to recharge sales for this product line. 

I would argue that they should consider two types of additional research.  Mattel needs to find some other categories of toy, analogous to cars, that have achieved strong success with moms.  Is there another category that might, at first, have been hard to understand for the typical mother, but in fact did achieve strong sales.  Why did that product take off?  What made moms purchase that product?  Furthermore, Mattel needs to engage in some anthropological research.  My wife plays cars a lot with my five-year old son.  Mattel needs to understand how some moms do play cars with their sons.  Does their play pattern differ from the way dads play cars with their kids?   How might understanding that play pattern help drive more sales to mothers?   Watching kids and moms at play will be helpful in answering these questions. 

Should You Examine All Your Options At Once?

Stanford Professor Baba Shiv and Columbia Professor Sheena Iyengar have conducted some interesting new research about consumer decision-making processes.  They created a series of experiments to examine whether consumers were more satisfied when they examined all their options at the same time, versus looking at the options sequentially.

Their experiments involved the purchase of products including wine, chocolate, and nail polish.   The research findings showed that, "Sequential choosers were less satisfied with their chocolates than were participants in the simultaneous group. And, when offered the opportunity to switch to a different chocolate — a randomly selected one, they were told — more of the sequential choosers opted to do so, even though they knew virtually nothing about it."

What explains the higher satisfaction on the part of those examining all their options at once? The researchers argue that hope and regret play a significant role.  People in the sequential situation worry about possible future options (subsequent and unknown) that they may forgo by making a choice now.   People don't seem to have that worry when they examine a wide array of alternatives simultaneously. 

Heineken - The Candidate - A Different Kind of Interview!

OfficeMax and Office Depot Merger

The Wall Street Journal reports that OfficeMax and Office Depot are in advanced discussions regarding a potential merger.   The article, by Anupreeta Das, Ryan Dezember, and Ann Zimmerman cites many of the benefits of the deal.  For instance, the authors note that experts estimate roughly $500 million in synergies may emerge from the deal.  The article also cites Staples founder Tom Stemberg, who says, ""This should have happened a long time ago.  It's healthy for the industry. It takes out excess capacity.''  (note: I worked at Staples in the mid-1990s, when Stemberg served as CEO). 

I would agree that the merger will yield some significant cost synergies, provided merger integration is  managed well (a major caveat).  Moreover, the industry does have excess brick-and-mortar capacity.   Online players such as Amazon have taken a significant bite out of the traditional office supply industry in recent years.  The companies have closed some stores in response to the shift toward e-commerce, but more rationalization of the store base needs to occur.   The article points out that many experts think the three major office supply retailers have not downsized their brick-and-mortar footprints fast enough. 

I do have some concerns though.   I would ask the following question: Why will a merger drive out more excess store capacity than otherwise should have been eliminated by the companies individually?   The answer: Perhaps the merger's promises of cost synergies will create the public accountability that will drive necessary rationalization.   In other words, maybe you need the merger to push management to do what they otherwise have been slow to do. 

I also have a second question to pose:  How about the issue of taking on the e-commerce challengers?  Does the merger make these companies more formidable competitors relative to the Amazons of the world?  Perhaps, but I'm not so sure.  Again, the question for management is clear:  Why will a merged entity do the things to be successful against online competitors that the two firms have not otherwise been able to do to this point?  

Finally, I would offer one other concern.   In many industries, mergers that drive out excess capacity can help prop up prices.  When excess capacity exists, price wars often occur as firms try to fill that capacity and cover fixed costs.  However, in this industry, removing excess capacity may not yield major price gains.  Why?  The competitors setting the price level are not the brick-and-mortar players;  Amazon and other e-commerce players are pushing down prices.  That pressure won't change due to this merger.

Carnival Cruise Ship: Public Relations Mess

We have all watched the amazing story unfold on that Carnival cruise ship over the past few days.  Overflowing toilets, irate customers, and an explosion of criticism via social media... Carnival executives have their hands full with this incident.  Many people have been offering suggestions regarding the near term public relations strategy that Carnival should employ.   I would like to offer one point that is a bit more long term in nature.  Carnival has to conduct a highly transparent after-action review.  I would recommend bringing in reputable outside experts to help conduct a review of safety and operational procedures.  Moreover, Carnival needs a clear communication plan associated with that after-action review process.  How will the various stakeholders be kept informed of the process and the findings?   How will potential customers learn about the corrective actions that result from this lessons learned exercise?   Having a transparent and legitimate/credible after-action review process will go a long way toward rebuilding the company's reputation.   Yes, they can do some things in the short term to manage the public relations crisis.  However, salvaging the brand in the long run requires a clear demonstration that the firm has done everything possible to insure that this type of incident does not happen again. 

Maker's Mark: Is Diluting the Boubon a Good Idea?

I have to admit that I was very surprised when I heard this week's news about Maker's Mark bourbon.  The company announced that they cannot keep up with customer demand, and therefore, they are cutting the proof from 90 to 84 to boost availability.   As Roger Dooley points out in his column at Forbes, the move risks damage to the brand.  Even worse, Dooley cites a statement by the company's chairman emeritus, Bill Samuels, Jr (son of the company founder).    Here is an excerpt from a news report by the Louisville Courier-Journal:

In an interview Monday, Chairman Emeritus Bill Samuels Jr. said he failed to foresee a worldwide surge in demand for premium bourbon when he was still in charge of the brand about six years ago. As a result, Maker’s Mark is being diluted to 42 percent alcohol by volume, from 45 percent, so more of the whiskey can be bottled to meet demand. That’s a cut from 90 proof to 84 proof.“I was the forecaster in chief around here. ... I must have been asleep at the wheel,” Samuels said.  Samuels and his son, Maker’s Mark Chief Operating Officer Rob Samuels, insist consumers won’t notice the change when the slightly weaker bourbon hits shelves in the next few weeks. Even Maker’s Mark’s professional taste testers couldn’t tell the difference, Rob Samuels said.

Wow... as Dooley rightfully points out, why makes things worse by claiming that your loyal customers won't know the difference!   Perhaps it is true, but should you really say that?   The bigger question is whether Maker's Mark has put short term revenue and market share goals ahead of what is good for the brand in the long run.  Does this move really fit with a company whose historic slogan was:  "It tastes expensive... and is." 

How does a firm handle scarcity?    Should it try to capitalize on the excitement and frenzy that scarcity can create, or should it move to rapidly expand supply?   One other interesting note:  Beam Spirits now owns Maker's Mark.  Would the company have made the same move if it was privately held?  Does being part of a publicly traded company put too much pressure on management to make up for this supply shortage? 

Abraham Lincoln: Leadership Lessons

Today we celebrate President Abraham Lincoln's birthday.    In honor of the great 19th century leader, I thought that I would take a look at one important leadership lesson pertaining to him.    Doris Kearns Goodwin spoke to Harvard Business Review several years ago about her research on Lincoln.  She talked specifically about how he made the decision regarding the Emancipation Proclamation:

For example, for months Lincoln let his cabinet debate about if and when slavery should be abolished. Finally, though, he made up his mind to issue his historic Emancipation Proclamation to free the slaves. He brought the cabinet together and told them he no longer needed their thoughts on the main issue—but that he would listen to their suggestions about how best to implement his decision and its timing. So even though some members still did not support Lincoln’s decision, they felt they’d been heard. And they had been. When one cabinet member suggested that Lincoln wait for a victory on the field to issue the proclamation, Lincoln took his advice.

I take two key lessons away from this example.  First, Lincoln appears to have led a decision-making process that most advisers felt was fair, i.e. he not only gave them voice, but made them feel that their views had been considered genuinely and thoughtfully.   Second, Lincoln still gave them room to have input after he had made the final decision.  However, he didn't give them an opportunity to undo the decision or revisit the choice.  Instead, he brought them back into a dialogue about how to best implement his decision.  It turns out that they had a good suggestion regarding the relationship between his political move and a battlefield victory in the late stages of the Civil War.   Many leaders could use the time of announcing a decision to pivot the conversation with their team, away from WHETHER to do something to the issue of HOW to do it.  In that way, you can give them voice once again, and you can make others truly own the implementation process.  

How Things Go Viral

Over the past few years, I've become a fan of Wharton Professor Jonah Berger's research.   He now has a book out titled, Contagious:  Why Things Catch On.   Fast Company has profiled his book, and they offer a summary of the basic steps he has outlined for making something go viral.  Berger refers to it as the STEPPS method: 

• Social Currency: We share things that make us look good (even if that means pictures of our cat).
• Triggers: Easily memorable information means it's top of mind and tip of the tongue.
• Emotion: When we care, we share.
• Public: Built to show, built to grow.
• Practical Value: News people can use.
• Stories: People are inherent storytellers, and all great brands also learn to tell stories. Information travels under the guise of idle chatter.

I'm really looking forward to reading the book.  I'll put together another blog post once I'm done with the book.

Collegiate Athletic Success as Advertising: Is it Effective?

Harvard Business School Professor Doug Chung has written a new working paper titled, "The Dynamic Advertising Effect of Collegiate Athletics."  He explores the impact that athletic success impacts the quantity and quality of a university's applicant pool.  Here's an excerpt from the abstract to his paper:

I estimate the impact of athletic success on applicant quality and quantity. Overall, athletic success has a significant long-term goodwill effect on future applications and quality. However, students with lower than average SAT scores tend to have a stronger preference for athletic success, while students with higher SAT scores have a greater preference for academic quality. Furthermore, the decay rate of athletics goodwill is significant only for students with lower SAT scores, suggesting that the goodwill created by intercollegiate athletics resides more extensively with low-ability students than with their high-ability counterparts. But, surprisingly, athletic success impacts applications even among academically stronger students.

The findings surely will provoke some interesting debate.   Note that Chung finds that going from good to truly great in NCAA football, for instance, can cause applications to rise by nearly 20%.   It takes a significant move in other areas of a university to achieve a similar impact.  For instance, Chung estimates that a college would have to reduce tuition by nearly 4% to get the same rise in applications, or it would have to recruit higher-paid, higher-quality faculty.  What's interesting about this analysis is that some will say that the cost of athletic success outweighs the positive effect on applications.   That's potentially true.  However, Chung shows that there is a cost to other ways of driving applications higher as well... so it's not immediately clear what methods are most cost effective to increase application quantity and quality.  Of course, we have to remember that athletic success can be very difficult to achieve, and it can be fleeting at times.  Schools may spend a great deal of money and never get to the "great" level required to get this type of increase in applications. 

Planet Fitness: Making Money in a Tough Industry

I ran across this excellent article by Judith Ohikuare in Inc. magazine.  The article is titled, "The Secret to Planet Fitness's Success."  Here's a quote from the company's CEO in the article:

It's very, very difficult to make money in the fitness industry. In order to thrive, you really have to have a niche and sell it. You've either got to be at the high end or at the low end; otherwise, you're not in at all. We're at the very low end: Members have access to a great club for 10 bucks a month, and I don't see that changing. We keep it as simple as possible, so that there are as few areas to disappoint as possible. When we started out, we included perks that everyone else had, such as day care and yoga classes, but none of that made sense for us.

Having read that quote, now check out the commercial below, a creative follow-up to the famous "I lift things up and put them down" ad which I featured on the blog awhile back. (Thank you to student Meredith Soper for pointing me to this commercial).   What you see is a company that is clearly trying to identify its niche... and clearly specifying what it is not (and who it does not seek to target).  In a very tough industry, leaders must pay particular attention to the clarity of their target market and the boundaries of their strategy.  Making clear choices becomes all the more important when you have fewer potential profits because of an unattractive industry structure (such as in the fitness center industry).  

Business Plans: useful or not?

Over the past few years, we have heard a great deal of conversation about the inadequacy of traditional business plans.   The lean start-up movement has argued that we should focus on developing a basic business model, testing out our ideas, and then refining them through a process of enlightened trial and error.  We should not over-emphasize a lengthy, drawn-out planning process.   The lean start-up movement emphasizes the notion rapid prototyping.   This approach has many merits.

Source: getaliff.blogspot.com

On the other hand, I think we can go too far in diminishing the importance of a business plan.   Dwight Eisenhower once said, "Plans are useless, but planning is indispensable."  In other words, the process of thinking through an issue and developing a strategy can be very useful. 

The mistake that many people make though is becoming too wedded to that original business plan.   A process of research and analysis can be productive, but it must lead quickly to a rapid prototyping phase.  We have to take action, and learn from that action.  However, we can't just leap without any spade work. 

For the Wall Street Journal, London Business School Professor John Mullins has written a great column exposing some of the many problems with traditional business plans.  For those interested in learning more about this topic, I strongly suggest reading his essay. 

Oreo: The Power of a Nimble Social Media Strategy

By  now, many of you have heard of Oreo's social media grand slam during the Super Bowl.  While all of us sat through that lengthy delay due to the power outage, Oreo's social media team unleashed the tweet heard round the world.   The tweet read:  "Power out, No problem."   The tweet included the photo shown here.

15,000 people retweeted that simple message.   More than 20,000 people "liked" it on Facebook.   Oreo's Instagram followers mushroomed from 2,000 to 36,000.   

Forbes reports on the most interesting part of the story - namely, how they managed to engineer such a rapid and highly creative response.  Apparently, Oreo's brand team had set up a "command center" at advertising agency 360i’s offices in New York City.    All of Oreo's advertising agency partners set up shop together at those offices, with Lisa Mann, an executive from Oreo's parent company on the  phone.   Mann explained how they moved so quickly:  “Because everyone was together, they had everyone in place to jump on a real-time marketing opportunity, which was, how would Oreo see the blackout? And Oreo saw the blackout as an opportunity to dunk in the dark.”

What a terrific story!   I love the fact that preparation yielded such a great result.  They knew that the Super Bowl represented a unique opportunity.  While so much attention is focused on the television ads, social media represents a huge opportunity at low cost.  With the blackout, everyone took to Twitter.  The volume of tweets exploded.  That posed a challenge for many firms though. How do you stand out when the Twitter world suddenly became so crowded.   Being prepared and ready to move so quickly turned out to be a tremendous advantage.   

Notice that Oreo did not try to be controversial or outlandish.  They stayed true to the brand.  So many social media and television advertising efforts associated with the Super Bowl yield poor results, because they emphasize being funny or controversial at the expense of communicating an authentic and consistent message about the brand.  Think about some of the ads you saw this weekend.   How many times did you think to yourself:  While that ad was funny, I'm not sure I know what it has to do with that product or brand.  

Peripheral Knowledge & Breakthrough Innovation

My former graduate school classmate, Martine Haas (now a professor at Wharton), has written a new paper exploring how peripheral knowledge might impact breakthrough innovation.  Haas describes peripheral knowledge as information and ideas that may not seem pertinent to a particular task, that are outside of that technical domain.   Haas argues that that peripheral knowledge drives innovation through two mechanisms:  transplantation and perspective shifting. Haas defines transplantation as "the direct transfer of artifacts, technologies or practices from peripheral domains into core domains, with or without some modification."    Perspective shifting means that " expertise or experience in a peripheral domain leads work group members to see a problem in a core domain differently, thus revealing new solutions." 

Haas and her co-author, Wendy Ham, go on to argue that having more one person exploring a peripheral knowledge domain can be helpful, but of course, that takes scarce attention away from the specific task at hand.  In short, it's a balancing act:  How much time should we spend focusing narrowly on the task at hand versus moving outside of that area to explore potentially, but perhaps not very useful, topics? 

One last challenge:  Which peripheral domain will be most useful?  Well that's a tough one.  It's difficult to know in advance.  However, I do think groups can be purposeful about peripheral knowledge accumulation.  At leading design firms, they think carefully about related domains that are worthy of exploration.  They examine industries or products that might be in some way analogous to their current project, and then they explore those areas.   Stepping back at the start of a project to think about potentially useful peripheral knowledge could be a key step in an innovation team's work. 

Lessons from the Columbia Accident

10 years ago tomorrow (February 1st, 2003), the Columbia shuttle accident occurred.  After the tragedy occurred, my colleagues and I embarked upon a lengthy research project culminating in the creation of an award-winning multi-media case study, a book chapter, a Harvard Business Review article, and other materials.  What lessons did we derive from this tragedy?

1.   NASA had a culture in which many people did not feel safe speaking up.  As a result, people downplayed their concerns about the foam strike, rather than sharing them openly.   Leaders did not do enough to cultivate dialogue and dissent.  They tended to be very passive, assuming that bad news would surface on its own.  It rarely does.  Leaders need to draw out the bad news, as it does not usually rise to the top.  

2.  Framing the shuttle program, from the very beginning in the 1970s, as a routine, operational endeavor turned out to have long-lasting detrimental effects.   The shuttle program should have been framed as an experimental initiative.  Promising dozens of flights per year, naming the vehicle a "shuttle" and describing space travel as "routinized" pushed the organization away from its roots during Mercury and Apollo as a laboratory of exploration.   The adoption of the production/routine mindset contributed to an obsession with schedules and deadlines, the creation of rigid organizational processes and protocols, and an insufficient emphasis on the imperfect state of knowledge in the organization. In short, it meant that the organization did not have a sufficient learning orientation. 

3.  Managers at NASA exhibited what Rebecca Wohlstetter has described as a "stubborn attachment to existing beliefs."  They had become convinced that foam strikes could not damage the shuttle.   The confirmation bias exacerbated the problem.   They tended to look for data that confirmed this pre-existing belief, and they discounted signs that contradicted the conventional wisdom about foam. 

Lessons from the Challenger Accident

Yesterday marked the 27th anniversary of the Challenger space shuttle accident.  Still today many leadership programs and business schools study this awful tragedy.   We analyze it because it offers profound lessons about leadership, risk management, and decision-making.  

Let me offer three points that we should take away from this tragedy as we reflect on it today:

1.  Normalization of deviance.    Diane Vaughan wrote the seminal book on the Challenger accident in 1996.  In that book, she explained how organizations gradually come to accept more and more risk.   She described this normalization process whereby the unexpected gradually becomes the expected and then becomes the accepted.   All organizations should be wary of moving down that slippery slope.

2.   Advocacy vs. Inquiry.    Many people initially described the eve-of-the-launch teleconference as an example of groupthink.   I don't think that's correct.   Engineers from Morton Thiokol clearly were arguing against the launch.  The meeting did not lack dissent and disagreement.   The real problem was that both sides (for and against launch) were operating purely in advocacy mode.  Each side was pushing its position.  Neither side did much to truly learn from the other.   The entire group did not move into collective inquiry mode, seeking to understand the problem of O-ring erosion more deeply or the reasons for each side believing what it did.   Instead, they argued their positions with regard to the next morning's launch and became more and more entrenched and polarized.   Effective teams balance advocacy with inquiry, so as to have a more constructive dialogue and debate.

3.  Learning from our failures.   During the Columbia shuttle accident investigation, astronaut Sally Ride said, ""I think I'm hearing an echo here."  She meant that NASA had repeated many of the failures of the past.  While they had fixed the technical errors after Challenger (no more o-ring erosion), NASA executives had not fixed the leadership and cultural problems that contributed to the tragedy.  Those problems continued and contributed to the Columbia disaster many years later.  Successful organizations take a hard look at their failures, and they examine the broad range of causes for those failures...not just the technical issues.   

Bryant IDEA

Over the past year, I have worked with an incredible group of people to create, plan, and execute Bryant IDEA: Innovation and Design Experience For All - a three day innovation immersion experience for all 746 first-year students.   Students applied design thinking to tackle complex real world problems.  They conducted anthropological research in the community, engaged in brainstorming sessions, and employed rapid prototyping techniques to develop creative solutions to these challenges.   Faculty, staff, upperclassmen students, and alumni mentored these student teams.  It was an exhausting and thrilling experience.  I hope you enjoy this video. 

Does going public stifle innovation?

Stanford Professor Shai Bernstein has conducted a new study on the rate of innovation at firms who issue an initial public offering.   According to Bernstein, "Using patent-based metrics, I find that the
quality of internal innovation declines following the IPO, and firms experience both an exodus of skilled inventors and a decline in productivity of remaining inventors."    Specifically, he found a "substantial decline of approximately 40 percent in innovation novelty as measured by patent citations."  Note that he didn't find the overall number of patents decreasing for these firms, just the level of breakthrough developments.  Bernstein also finds that post-IPO firms tend to shift toward acquisitions to drive innovation.  In the five years after an initial public offering, roughly 1/3 of the patents tend to come from acquisitions.  Finally, he finds a much smaller (and not statistically significant) decline in innovation novelty at those firms whose CEO also serves as Chairman (as compared to companies who have split the Chairman/CEO positions).  What explains that finding?  Bernstein hypothesizes that the CEO who also serves as Chairman is more "entrenched" and less susceptible to short-term profit pressures from Wall Street.  Therefore, he or she may be able to invest more freely in research and development that may have a low probability of succeeding, but could lead to a breakthrough innovation. 

What happens if your favorite brand is attacked?

Think about one of your favorite brands, one to which you are quite loyal.  Perhaps you might even describe yourself as a fan.  How would you react if you heard some very negative news about that company?  Would you be less willing to purchase that product?  Or, would you become very defensive?

Monika Lisjak, Angela Y. Lee and Wendi L. Gardner set out to examine these questions through a series of experimental studies.  In one study, the researchers examined how people would respond to a critical editorial about a favorite brand - Starbucks or Facebook.  According to Kellogg School of Management Insights, "Sure enough, after crunching the numbers, Lee and her colleagues found that self-conscious, low-self-esteem subjects who said they liked Starbucks initially actually rated the coffee company more favorably after they had read the critical editorial."   Interestingly, in a subsequent experiment, they found that individuals get less defensive about a favorite brand if they are given some other opportunity to affirm themselves.  According to Lee, "If Starbucks is part of you, and you read something negative about Starbucks, you feel attacked.  But I now give you another way to feel good about yourself. Then, once that need is being satisfied, you may not feel that you need to defend Starbucks anymore.” 

I'm not surprised by the findings.   People do develop a strong attachment to certain brands.  Several questions do remain.  Specifically, I wonder whether the level of criticism attached to the brand matters.  Where do people draw the line?   What would it take for someone to "turn" on one of their favorite brands?   You would imagine that people might begin to "turn" on their favorite brands if a pattern of alleged misconduct emerges over time.  How much of a pattern does one need to see though?  Finally, I wonder if there may be other attributes of individuals that might signal whether they are likely to be defensive, or if they would lessen their loyalty, to favorite brands that have been criticized.   In other words, what are the characteristics of the "hyperloyal" customer who will be likely to stand firm even in the face of criticism for their favorite brand?

Conducting Virtual Meetings

Have you been on a virtual meeting that was incredibly unproductive?   Do you have to conduct some team meetings virtually because you are not all co-located?  How can you make things better?  Mars Mullenweg, from the company that created WordPress, has some good suggestions in Fast Company this month about how to conduct better virtual meetings.   Specifically, he offers four tips:

1. He notes that it becomes very easy to misinterpret the meaning of a message in a text-based chat platform.  Therefore, you need to take the time to write a few extra words, to elaborate on your thoughts.  Take care to be a bit extra sensitive in how you say things.  Being too concise can cause people to believe that you are being curt with them. 
2.  Sometimes, it becomes clear that two parties are really talking past one another in an online chat.  At that point, rather than continuing in a time-consuming back-and-forth, take a moment to pick up the phone.  A quick conversation by phone can help clarify a confusing situation.
3. Don't multi-task.   You have to focus so that you can listen carefully, ask people for clarification, and offer your comments in a way that builds appropriately on others' comments. 
4. Recognize when an in-person meeting is appropriate.  Sometimes, a virtual chat and even a phone conversation simply are not sufficient.  You have to spend the time and money to meet in person.  Knowing when that is the case, and acknowledging that, proves to be a very important team leadership skill. 

Tremendous Debate about Brainstorming

Check out this terrific debate about brainstorming, facilitated by Fast Company and published in the new issue of the magazine.  The discussion includes Bob Sutton, Charlan Nemeth, Keith Sawyer, and Gerard Puccio.  

Brainstorming tutorial from Stanford d.school

Managing Your Time

The Wall Street Journal reports on the findings of a McKinsey study about time management by senior executives.  Not surprisingly, they find that many executives struggle with time management, much like the rest of us.  McKinsey examined those leaders who were not satisfied with how they managed their time, and they compared those leaders to others who were satisfied.  They found that the dissatisfied executives could be clustered into four subgroups.  Here's the description from the Wall Street Journal:

• “Online junkies” spent on average 38% of their time using email or voicemail, leaving little time for personal interaction.
• “Schmoozers,” represented well by CEOs and sales directors, interacted heavily with external stakeholders like clients and customers, at the risk of neglecting their own employees.
• Meanwhile, “cheerleaders,” often C-suite executives, spent a big chunk of their schedules meeting and managing employees, but considerably less time with outsiders.
• “Firefighters,” usually general managers, were often preoccupied with resolving short-term and unexpected issues.

Take a moment, and think about how you manage your time.  Are you inefficient?  Do you fall into one of these categories?

Disney MagicBands: This Could be Magical... and Expensive!

Source: Fast Company

Disney has used RFID technology to develop MagicBands - a wristband that serve as a guest's theme park ticket, hotel key, and payment system throughout DisneyWorld.   When I read about this project at Fast Company's website, I thought to myself... "These MagicBands could be REALLY expensive for parents."  It's going to make spending money that much easier.  I speak from firsthand experience.  We just stayed at DisneyWorld's Contemporary Resort a few weeks ago.   The cards you receive upon check-in serve as hotel room keys and park tickets, and they can be used to pay for food and gifts throughout the parks.  I found myself a bit less hesitant about spending money with that card in hand, as opposed to having to pull cash out each time we bought something.  However, as Fast Company writer Mark Wilson points out, these new MagicBands offer more than a way to dig deeper into customer wallets.  Here's an excerpt:

But the cashflow aspect is only one aspect of Disney’s new service. When you begin to consider the potential of wearing a wireless ID around your wrist, all sorts of natural, customized interactions will become possible. Imagine a child meeting Mickey Mouse, and after sharing a warm hug, Mickey actually wishing them a happy birthday by name. There’s a digital handshake going on here, of course, but it’s totally imperceptible. All a child is left wondering is, “How did Mickey know me … and that it was my birthday?!?” Animatronics will see a similar personalization, so the otherwise obtuse talking robots can specifically acknowledge the people standing in front of them.  At the same time, MagicBands enable a deeper level of data collection for Disney. They’ll be able to track someone through the entire park--to see their kingdom as a complex interaction model--finding trends in preferences and habits that can no doubt be monetized. Do people who meet Cinderella buy more princess apparel? Do those who eat the cheese fries for lunch go back to the hotel to take naps?

Talk about Big Data and Personalization all wrapped up into one incredible initiative!   Immediately, one thinks about privacy issues, but Wilson points out that parents will be able to establish some privacy controls on the wristbands.   The bigger issue is how Disney uses the wristbands.  I think that the real opportunity here lies in focusing first on enhancing the guest experience.  If this new tool can make the guests enjoy their stay even more, then the money will follow.  People will spend more if they are more engaged and more satisfied with the experience, and if the wristbands can be used to minimize some of the guest's typical problems at the park (consider how mobile apps have helped people find rides with the shortest wait times).   If the experience is enhanced, guests will stay longer at the park, interact with characters and exhibits in a more meaningful way, and avoid some of the frustrations that they typically encounter at the park.  When that occurs, the improved profits will come.

Professor Richard Hackman

Source: Team Diagnostics

I heard the sad news this morning of the passing of Harvard Professor Richard Hackman.  Widely acknowledged as one of the giants in the study of teams, the social psychologist influenced and advised many young scholars over the years.  Hackman earned the Distinguished Educator Award and the Distinguished Scholar Award of the Academy of Management during his career.  Perhaps more importantly, he had a vast influence on practitioners as well.   He advised and presented to many organizations in the private and public sector, offering them useful insight on how to make their teams more effective.  His book - Leading Teams: Setting the Stage for Great Performances - influenced the thinking of many managers and executives and earned him the Academy of Management’s Terry Award for the best management book of the year. Here are just a couple of terrific excerpts from an HBR blog post that Hackman wrote in 2011.   In the post, Hackman explained some of the common misperceptions about teams. 


Misperception #1: Harmony helps. Smooth interaction among collaborators avoids time-wasting debates about how best to proceed.

Actually: Quite the opposite, research shows. Conflict, when well managed and focused on a team's objectives, can generate more creative solutions than one sees in conflict-free groups. So long as it is about the work itself, disagreements can be good for a team. Indeed, we found in our earlier research on symphony orchestras that slightly grumpy orchestras played a little better as ensembles than those whose members worked together especially harmoniously. 
  
Misperception #4: Face-to-face interaction is passé. Now that we have powerful electronic technologies for communication and coordination, teams can do their work much more efficiently at a distance.
Actually: Teams working remotely are at a considerable disadvantage. There really are benefits to sizing up your teammates face-to-face. A number of organizations that rely heavily on distributed teams have found that it is well worth the time and expense to get members together when the team is launched, again around the midpoint of the team's work, and yet again when the work has been completed.

Jimmy Kimmel: New $7 Cup of Coffee at Starbucks

Innovate by Looking for Problem Patterns

Is The End Drawing Near for Sears?

The Wall Street Journal reports today that Edward Lampert, whose hedge fund ESL Investments Inc. controls over 50% of Sears' shares, will be taking over as the CEO of the company.   Lampert merged Sears and K-Mart several years ago, and he has been Chairman of the company since that time.  He succeeds a former IBM executive who ran the company for the past two years.  Before that, Sears had an interim CEO for three years.   Hmmm... That's a pretty long period of instability at the top, and now we will be continuing with a person at the helm who lacks retail industry experience.   Can Lampert turn this ship around, or is it too late?

Same-store sales have decreased for six straight years.  Sear lost $441 million through the end of the third quarter, and it expects to lose roughly $300 million in this quarter. Concerns have been raised about liquidity at Sears.  The firm is clearly in rough shape.

What should they do now?   I think Sears really has to think long and hard about what assets it has that are truly valuable and distinctive.  It's future must rest on building around those assets.   What is valuable and distinctive?  Craftsman and Kenmore appear to fit the bill.  Perhaps Lands End does as well.  After that, it's not clear that the firm has a future.  So, if I were thinking about the future strategy, I would be thinking about those three brands, rather than trying to preserve the entire traditional department store business.  Maybe the future is in small stores and/or an online retail presence that just sell Craftsman, Kenmore, and related brands, with Lands End sold off to another clothing catalog retailer.  For certain, the future does not seem to bright for the traditional brick-and-mortar business that they have been trying to preserve for years, amidst a clear and tragic decline. 

David Kelley on 60 Minutes

60 Minutes ran a terrific and emotional feature last night on David Kelley, founder of design firm IDEO.

Asking Better Questions

Shane Snow wrote a good column recently on the importance of asking good questions.  He argues that asking good questions serves as a crucial leadership capability that people should develop.   Snow makes some good recommendations, such as trying to not ask leading questions, reframing questions later in a conversation when you haven't received a complete response, and replaying what you have heard to insure that you have a solid understanding.  

I would make a few additional points.  A good leader also asks questions that explore a topic a bit deeper, even when they appear to have a consensus in a meeting.  A good leader uses those questions to accomplish two things:  1.  Test what-if scenarios, and 2.  Test for understanding and alignment.   With regard to the first point, leaders want to make sure that they uncover any hidden risks.  They might ask: "What if some of our assumptions prove to be untrue?"  "What if our competitor responds in an unexpected way?"   With regard to the second point, a leader needs to make sure that a team is truly on the same page, and that everyone shares a solid understanding of a decision rationale, as well as each person's role and responsibilities during implementation.  Asking good questions can help reveal whether people are truly on the same page before moving forward with execution of a plan of action. 

Being Clear vs. Being Right

Fast Company's Jessen O'Brien recently interviewed Ping Fu, the cofounder and CEO of 3-D software company Geomagic.   Ping Fu just wrote a new book titled Bend, Not Break: A Life in Two Worlds. Fu's story is quite remarkable.  She grew up during the Cultural Revolution in China.  She suffered brutal treatment at the hands of Mao's regime.  Fu survived those tortuous years and came to the United States to become Inc. magazine's Entrepreneur of the Year in 2005.  In this interview, she offers some leadership advice that I found to be quite thought-provoking:

I found in my career that it is better to be clear than to be right. A lot of times, I find leaders want to be right and they think being right is what gains respect. I find being clear is what gains respect--if you’re clearly wrong, people can correct you, and if you’re clearly right, people can follow you.

Here's why I think she makes a great point.  If someone isn't making a clear point, here is what you should be asking yourself:  Do they really have a sound strategy, vision, plan?  Lack of clarity may be a simple problem of  articulation and communication.  However, in many cases, a lack of clarity speaks to much deeper problems.  An inability to articulate a plan or strategy clearly means that someone actually has a muddled vision.  They haven't thought it through with the type of precision required to perform at a very high level.  In many cases, it means that they are trying to do too many things at once, or they are pursuing inconsistent objectives.     

Should You Purposefully Annoy Your Employees?

Ray Fisman and Tim Sullivan offer an interesting anecdote in today's "How To Be A Better Boss" article in the Wall Street Journal.   Fisman and Sullivan write:

Employees often wish managers were a little more understanding, but people tend to associate the idea of "understanding" with "nice." A little well-directed pain can be a good thing in getting workers to focus on the tasks they might otherwise choose to forget, and to increase overall productivity.  Given that developers often prefer programs to people, Kayak founder Paul English says, making them deal directly with customers' questions drove them nuts. Once they heard the same complaint two or three times, the engineers tended to stop and fix the code. As an added bonus, after taking his turn on customer-service duty, an engineer can pass the phone—along with its grating ring—down the line for someone else to deal with.

What an interesting example!   Of course, the phone calls work for reasons beyond the fact that they annoy the software developers.  The phone calls create a direct line of communication between the developers and the users.  Kayak has removed all the information filtering that often takes place between the users in the marketplace and the developers back at the office.  Moreover, developers get a real sense of what is just a one-off complaint versus a real pattern.   Too often, someone can shrug off a complaint from the sales force as an "isolated incident."  However, in this case, the developers can begin to see that a pattern exists, and that the incident is far from isolated.   Finally, the developers share the pain here.  We don't have a few "problem-solvers" focused on fixing bugs.  We have all the developers addressing bugs.  Everyone is accountable, as opposed to having a small unit that worries about fixing bugs.   The collective accountability goes a long way toward improving quality.  Once everyone knows that they will have to address these calls at some point, it also makes people take extra care to get it right the first time.  

Pivot: The Road to Ruin for Many Startups

The word "pivot" has become part of the entrepreneurial lexicon over the past few years.   Eric Ries developed the "Lean Startup" methodology for building and launching new products.  Ries argues that entrepreneurs should work toward the development of an MVP - minimum viable product - and then listen carefully to customer feedback so that the next iteration of improvements can be put in place.  Entrepreneurs should use the minimum viable product as part of a process of disciplined experimentation, whereby they test core hypotheses about their business model.    As entrepreneurs gather feedback, they should pivot based on what they are learning.  According to Ries, a pivot is a "structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth."

In a blog post for the Wall Street Journal, serial entrepreneur and Stanford Professor Steve Blank offers some cautionary words about the "pivot" concept though.  Blank gives an example of a founder who would rush back to his startup's offices after every customer visit and initiate a fire drill of sorts. The founder would constantly be advocating changes based on his most recent interaction with a customer.  Blank explains the problem:

Pivot as an Excuse
I wasn’t surprised when he pushed back: “I’m just getting out of the building and listening to customers. All I’m doing is pivoting based on their feedback.” By now I’ve heard this more times than I liked. “Yuri, one of the things that make you a great founder is that you have insight others don’t. But like all great founders, some of these insights are simply hallucinations. The problem is you and other founders want immediate action every time you have a new idea. That’s a mistake.
“A pivot is a substantive change to one or more of components to your business model.” You’re using “Pivot” as an excuse to skip the hard stuff – keeping focused on your initial vision and business model and integrating what you’ve heard if and only if you think it’s a substantive improvement to your current business model. There is no possible way you can garner enough information to pivot based on one customer’s feedback or even 20. You need to make sure it’s a better direction than the one you are already heading in.”

Beware of Shiny Objects!

Adam Bryant interviewed Sandra Kurtzig, CEO of software management firm Kenandy, in a recent Corner Office column for the New York Times.  Kenandy offers some great advice for leaders regarding the need to stay focused despite some dazzling and attractive distractions that sometimes appear.   Here's an excerpt:

I don’t run after “shiny objects.” That’s a mistake that a lot of people make in running a company, especially in starting one. They tend to get a lot of opportunities from people who want to partner with them. And these are just shiny objects, because there are very few partners that end up being right for your company. So I’m much more selective. If I hear something, I’m very quick to think, ‘Hey, that’s a shiny object; let’s get back to work.’ I think that’s what’s so distracting to a lot of companies — they see a big customer or some other distraction, and they spend too much time on it and they lose their way. 

I agree wholeheartedly.  Leaders get approached all the time with interesting proposals both from potential external partners as well as from internal folks.   They see opportunities for new investments and initiatives emerging all the time.  Opportunities abound in many cases.  The question is how to screen those opportunities and put scarce resources to work on a few key priorities.  The scarcest resource often is not financial capital; it's management time and attention.   Top leaders simply can't focus on a laundry list of new initiatives.  Leaders also can't forget that execution on current initiatives will likely suffer if they turn their attention to new pastures too quickly.   Strong execution requires discipline not just from the troops, but from top leaders as well.    

Anxiety and Advice

Wharton Professor Maurice Schweitzer, PhD student Alison Wood Brooks, and Harvard Business School professor Francesca Gino have examined the impact that anxiety has on a person's receptiveness to advice from others.    The scholars explain that, ""In almost every domain, individuals discount the advice they receive. In contrast to this finding, we identify an important aspect of a decision-maker's internal state that causes individuals to be very receptive to advice: anxiety."    Ok, now here comes the really bad news.  Brooks explains that, "People in an anxious state were really bad at differentiating between good and bad advice."  

Why might that be the case?   They argue that people who exhibit high anxiety may be feeling a lack of confidence at that time.  Therefore, they look to others to help them figure out what to do in a particular situation.  The desire to resolve the anxiety may make it difficult for individuals to distinguish between helpful and harmful advice.  Individuals may move hastily to resolve the anxiety by making a decision and moving forward, even if they are basing that decision on advice that may not be very good.  

The scholars recommend that people step back and reflect a bit before making decisions in an anxious state.  I think that I would go a bit further though. I would argue that we could all benefit by taking more care in discerning what advice to take, from whom, and in what situations.   Getting advice from multiple parties, hopefully with diverse perspectives, can be very helpful.  Building a trusting relationship with an "experienced confidante" can be beneficial as well.   Thinking carefully about whether someone's expertise actually applies to your situation can be very important.  We sometimes rely on others for advice because they are very smart and successful.  However, that can get us in trouble if that person's experience is not very applicable to our situation. 

Staples: Innovating The Multi-Channel Experience

Staples ranks as the second largest online merchant  behind Amazon.  Now it hopes to expand upon its prior success on-line.  The company hopes to provide an improved multi-channel experience for its customers.  In other words, the firm wants to meet the needs of customers no matter how they shop, while providing a seamless experience across multiple platforms and channels.   To move forward in this regard, the company has opened a new Velocity innovation lab in Cambridge, MA.  Senior Vice President Brian Tilzer explains to Boston.com the purpose of the new lab:

"The vision for this center is to create a place where we can test, learn and iterate as rapidly as possible around new technologies," says Tilzer. As examples, he cited "thinking about how to leverage big data to deliver personalized experiences" and "helping consumers understand what services are available related to a particular product, like a laptop." But there will also be some blue-sky brainstorming, too, to "produce really cool stuff that's meaningful to our customers."

 The lab concept sounds very interesting, particularly when you note the location.  Staples is headquartered in Framingham, MA - in the suburbs about 15 miles west of Boston.  The lab is located in Cambridge, MA - right near where innovative partners have chosen to set up shop, including Endeca, Akamai, and Google.   The location is key to the concept in my view, because Staples understands that the cross-fertilization of ideas skyrockets when you put folks in close proximity to a number of other firms working on related issues and concepts.  It also moves these employees away from the "mother ship" so that they can think more freely, and not be trapped by the conventional wisdom and ingrained processes of the corporate center. 

Does GM Lose Car Sales Because of the Bailout?

Joseph White of the Wall Street Journal reports today that the Obama administration and General Motors have announced plans for the firm to buy 200 million of the Treasury’s GM shares at $27.50 a piece.   That move will begin the process of unwinding the government's stake in the firm.  White explains that the move to eliminate the "Government Motors" stigma from the company may be quite beneficial:


Once the last government share is sold, GM also can get to work unloading the pejorative “Government Motors” image that has weighed on the company in the U.S. market. It’s not clear how many potential GM customers have turned to Ford Motor Co. or other rivals out of distaste for the federal bailout. But they’re out there.

Call me skeptical, but I wonder how much removing the "Government Motors" label will really help GM sell more cars.  Are customers unhappy with the government bailout, particularly given that taxpayers will not come close to breaking even on their "investment" in the firm?   Sure, the bailout has many opponents.  Does that mean the company was losing significant sales as a result of the bailout?  I'm not so sure.  As White acknowledges, no one really knows how many customers have turned to rival car companies as a result of distaste for the bailout?  One could argue that the firm hasn't delivered the kind of attractive, high quality vehicles that it needs to produce in order to generate stronger revenue growth.   At the end of the day, the bailout may have improved the balance sheet and cost structure.  However, GM will only survive and thrive if it makes products that customers want.  I don't see a ton of evidence that the firm has become significantly better at doing that since the bailout.   

Leadership Development is for Top Executives Too!

Building on the last post, I think it's important to address one other problem with leadership development programs.  In many firms, high potentials and mid-level executives attend leadership development programs, receive 360 degree feedback, work with mentors, and receive coaching.   Companies invest a great deal at times to groom these mid-level executives for more senior positions.  However, they do not make a similar investment in members of the top management team. 

What's the problem with that approach?  First, it presumes that people do not need further learning and development once they reach the top level of the organization.  It suggests that they "know it all" at that point.   In fact, members of the top team often can use a break from their day-to-day work to think about broader strategic and leadership issues.  Investing in their development may not only improve their skills and capabilities, but it may help shake the conventional wisdom and groupthink that can emerge from an intact and cohesive team that has worked together for a long time in a particular company.  

Second, mid-level executives receive the wrong message.  They see top executives as not "walking the talk" regarding leadership development.   Somehow, what's good for the troops is not good for the top team.  That can't be the right message to send to future leaders of the organization.  

Retaining Top Talent by Making People More Attractive to Outside Firms

Elizabeth Craig, John Kimberly, and Peter Cheese have written a good column for the Wall Street Journal about how to retain your top executive talent.   They argue that we ought to be investing in leadership development, even if it means that our people become more attractive to other companies.  We might lose some people because we've made them more employable by outside firms.  However, in many cases, that type of investment in our people will actually increase retention.  Here's an excerpt:

That's why it's crucial that companies get serious about retention now. And that means giving executives opportunities to take on greater responsibility, broaden their skills and cultivate a network of relationships with their peers. These are the things that executives we have surveyed consistently say they want most from their jobs.  Of course, executives want these opportunities largely because the skills, experience and relationships they acquire make them more valuable on the job market. So there is always the risk that a company may invest in building its executives' talents only to see some of them take those talents elsewhere.  But our research shows that executives intend to stay longest with those companies that offer the greatest opportunities to enhance their employability. On balance, a company will keep more talent by helping its executives grow than it would by denying them these opportunities. And as a bonus, its executives will be more valuable to the company itself.

I agree wholeheartedly. I would simply stress that companies cannot simply put efforts into leadership development without actually delivering exciting opportunities that come with increased responsibility.  If someone gets mentored, sent to executive education programs, and assigned a coach... but has to wait and wait for that chance to take on new responsibility... well, then they are likely to leave.   People want to know that their efforts at self-improvement are going to yield opportunities to practice their new skills and capabilities.   They want to learn by doing.   Moreover, employees don't just want more responsibility.  Promotions alone won't do the trick. They want exciting opportunities.  They want to tackle new challenges and explore new aspects of the business or of their discipline.  Meaningful work is key, not just a new title and more direct reports. 

Struggles at Build-a-Bear

The Wall Street Journal reports that Build-A-Bear, the once high-growth retailer, has begun a search for a successor to founder and CEO Maxine Clark.  The company has struggled recently, even closing some locations.   What happened to this retailer, which had been growing rapidly and profitably several years ago?

Build-A-Bear offered a unique retail concept.  It truly provided an "experience" for the customer, not just a set of products.  In that sense, it should have been insulated a bit from the pressures that other children's toy retailers faced from internet retailers such as Amazon.  However, I think Build-A-Bear's growth strategy had some weaknesses that are not uncommon in retail.  First, it grew very rapidly, opening stores in malls throughout the nation.  However, the appeal of Build-A-Bear was, in part, because it was a destination.  You don't go to such a store on numerous repeat occasions.  You go rather infrequently - special occasions mostly, like birthdays and holidays.  When you have so many stores, it's hard to support them all given that you don't have customers coming back again and again each month.

Second, Build-A-Bear didn't innovate enough with regard to the store experience.  Children did not see or do unique things over the years; they were doing precisely what they had been doing on prior occasions.  That inability to innovate the experience meant that repeat visits were increasingly unlikely.

Third, the tie-ins to movies such as Smurfs are great; they produce a surge in sales.  However, you have to pay royalties on those products, and then you face the challenge of continuing to grow revenues after those movie promotions have ended. 

Finally, the company didn't generate enough of a powerful razor-and-blades business model to truly drive the type of profitability that they hoped to achieve. Compare them to American Girl.  In that case, young girls play with those dolls often, and they come back to the stores, catalog, or online store to buy new accessories, clothing, and other products that can be used with the dolls.   Build-A-Bear did not have that type of powerful razor-and-blades model.  Yes, kids bought outfits for the bears when they made the bear.  However, children didn't tend to come back often to buy other accessories.  Bears aren't like dolls, after all, in that they aren't played with repeatedly in the same way.  

Associational Thinking & Creativity

Entreprenuer Kevon Saber has written a good column on creativity for Fast Company.  He focuses on the notion that we should expose our people to ideas from different industries and disciplines to help stimulate creativity.   Saber points that many new ideas come from "associational thinking" - the ability to draw unique connections among seemingly unrelated concepts from different fields.  His column offers some ideas for stimulating associational thinking, drawing on the practices of various innovative companies.   I liked this particular technique quite a bit:

The event website Eventbrite hosts “Brite Camps,” internal training events led by different team members. Held during company hours, team members lead how-to sessions on varied topics from photo editing to options trading to poker. These interactive sessions not only strengthen company culture, they also build dexterity in team members to better conceptualize new ideas. It’s another case of diverse stimuli boosting the creative potential of a team.

While I do love these types of activities, I think that they cannot replace the most important method for stimulating associational thinking - READING.  Individuals can derive tremendous value from making a habit of reading voraciously about what is going on in other industries and disciplines.  We should not trap ourselves by only reading in our own specialized domain. 

Rules are made to be broken

You have all heard the phrase, "rules are made to be broken." Of course, the phrase makes compliance professionals cringe! The bottom line, though, is that it is very difficult to count on rules and procedures alone to govern behavior. If we want to insure that people do the right thing, we need to inculcate a strong set of values throughout the organization. We need people to understand the criteria they ought to use to make key decisions. We need to establish a framework that guides decision making, because we will never anticipate all situations, and we can never design "perfect" rules.

Overcoming Our Rigidity, Opening Our Minds

Ben Weinlick has a terrific article over at The Creativity Post blog.  The post is titled, "Defeating Rigid Habits to Spark Creativity."  He has some good suggestions including:

• Defeat habits by being curious about interesting ideas and interesting people
• Defeat habits by engaging lots of interests and hobbies
• Defeat habits by consciously shaking up routines
• Defeat habits by asking the “dumb questions”
• Defeat habits by hanging out with weird
• Defeat habits by focusing on a problem and then letting go; do something totally different
• Defeat habits by including people in your projects who are from outside your domain
• Defeat habits by developing a culture of serious play.  

Do we really care about internet privacy?

Why do people disclose so much personal information on Facebook?  Harvard Business School Professor Leslie John and her colleagues have conducted several fascinating experiments regarding internet privacy.   For instance, they developed a set of provocative questions regarding activities such as the use of drugs, viewing of pornography, etc. - creepy questions according to Professor John!   Then they examined whether the form in which they asked the questions might impact the extent to which people disclosed private behavior.  In one experiment, they established three conditions - all with the same questions - with data collected from respondents passing by a set of laptops set up on the Carnegie Mellon campus.   HBS Working Knowledge describes the three conditions as follows:


In some cases, they took an online survey titled "How BAD Are U???" - deliberately designed to look unprofessional, it featured red font and a pixelated cartoon devil.  Other participants received a deliberately professional-looking survey titled "Carnegie Mellon University Executive Council Survey on Ethical Behaviors," which sported the school's official crest. A third set, the control group, received the relatively neutral "Survey of Student Behaviors." 

What did the scholars find?   Students taking the purposely unprofessional-looking survey tended to admit to many more of these private behaviors than the students in the control group or the professional condition.  It seems odd, in a way, because you would think folks would be more hesitant and concerned about privacy on a site with a very unprofessional appearance.  Instead, it makes them less inhibited!   According to John, "When you're on a very official-looking site, it sort of cues you in to think about the concept of privacy.  We argue that oftentimes, privacy isn't something that's at the forefront of people's minds until you cue it." In fact, further experiments showed that privacy cues embedded in the surveys tended to make people more hesitant to disclose certain private behaviors. 

When Should Corporate Governance Become More Vigilant?

Dalida Kadyrzhanova and Matthew Rhodes-Kropf have written a new working paper that I found intriguing.  They examined how corporate governance changes as firms enter periods of high performance, even perhaps periods of equity over-valuation (they use some interesting measures to examine potential over-valuation of equity).  They found that, "Firm performance seems most impacted by governance when firm and industry deviations are high."  

The scholars argue that, during periods of equity over-valuation, executives are most likely to pursue investments and other decisions that may maximize personal utility at the expense of shareholders.  They do so because they essentially have some slack - plenty of resources at their disposal, and presumably some credibility with investors given the high performance.  During these times, then, corporate governance should become more vigilant so as to protect shareholders from "misbehavior" by executives.  The paper has important implications for boards of directors.  We typically think that the board role is most important during a crisis, when performance is poor.   That is probably correct. However, this paper reminds us that the board also has to be careful during periods of abundance.  That may be the time when the seeds of future crises are planted, as managers make flawed decisions - putting excess cash flow to work in ways that are not in the best interests of shareholders.  

Beware! We Overvalue Growth

Earlier this year, Michael J. Schill, Associate Professor of business administration at the University of Virginia Darden School of Business, wrote a terrific column for the Washington Post.  He offered a simple example of two mining companies. One had embarked on a growth strategy that involved expanding its balance sheet through major asset investments.  The other had embarked on a contraction strategy, spinning off certain parts of its business and shrinking its balance sheet.  Schill asked the question:   In which firm are people likely to invest?

Schill explains that many investors tend to flock toward the growth company.  They are attracted by the prospects of expansion and the new opportunities that those recent investments may bring.  However, that tendency to prefer the growth company may be a mistake.  Here's Schill explaining the potential bias that may be hampering investors' efforts to maximize returns:

Do investors have a good track record in pricing rapidly expanding or contracting companies? History tells us that investors tend to overprice expanding firms and underprice contracting firms. As an example, take a person who systematically invested over 35 years an equal amount of money in the stocks of firms whose balance sheet growth put them in the top 10 percent each year of U.S. public firms. That investor would find that the average annual performance of that portfolio would barely match the returns achieved by U.S. Treasury bills over the same period: about 4 percent. On the other hand, an investor who systematically bought the stocks each year of firms in the bottom 10 percent of balance sheet growth would be delighted to find average portfolio performance over the same period to be more than 22 percentage points above the returns achieved by Treasury bills: about 26 percent. The pattern suggests that expanding firms tend to be overpriced and contracting firms are systematically underpriced.

Your Front-Line Employees are Your Brand!

Companies spend a great deal of time and money building advertising campaigns, social media strategies, and other promotional vehicles to build brand equity.   For many firms, though, their front-line employees represent the most significant way that customers experience the brand.  Those employees become crucial ambassadors for the brand.  

Starbucks understands the crucial role that front-line employees (the baristas) play.  It has invested heavily in a program to inspire and motivate the baristas, and to help them bring the brand's values to life in each Starbucks location.   The company has created the "Starbucks Leadership Lab" to inculcate the core values of the brand in its workforce.  Here's an excerpt from a Fast Company article about this program:

Starbucks’s Leadership Lab is, as its name implies, part leadership training, with a station that walks store managers through a problem-solving framework. It’s also part trade show, with demonstrations of new products and signs with helpful sales suggestions, such as “tea has the highest profit margins.” The majority of experiences are meant to be educational, including several that give store managers access to top managers of the company’s roasting process, blend development, and customer service.  

But what makes the Leadership Lab different than a typical corporate trade show is the production surrounding all of this. The lights, the music, and the dramatic big screens all help Starbucks marinate its store managers in its brand and culture. It’s theater--a concept that Starbucks itself is built on.  “The merchant’s success depends on his or her ability to tell a story,” writes Schultz. “What people see or hear or smell or do when they enter a space guides their feelings, enticing them to celebrate whatever the seller has to offer.”

In this case, Starbucks is selling its employees the Starbucks brand. And it has given the Leadership Lab the same attention to detail as its store ambiance.  As Valerie O’Neil, Starbucks’ VP of global communications, puts it: “[The experiences] are wrapped in a very inspirational journey, so partners can walk away not only understanding and informed, but feeling it.”

Note that such programs cannot be efforts to simply dictate practices and policies to employees.  It cannot be an attempt to brainwash them regarding the company's goals and values.  It has to be a forum for two-way communication.   The messages and the values conveyed to employees must be authentic.  Store managers must "walk the talk" each and every day.  If not, then such programs will do more harm than good. Associates will feel that they have been misled.  They have to be part of the process, and there must be opportunities for them to express their ideas to management.  The photograph above demonstrates one of the ways in which the associates' ideas and thoughts are captured at the Starbucks Leadership Lab.